State: Taxpayers didn't feel financial pinch from shutdown

Minnesota’s historic three-week state government shutdown had essentially zero impact on the state budget, according to a report released Tuesday by Minnesota Management and Budget.

The state lost about $49.7 million in revenue and spent about $10.1 million preparing for and eventually recovering from the closure. That was offset by $65 million the state saved in salaries from the 19,000 state workers who were laid off.

The statewide economic impact of the shutdown was largely muted by court orders that restored about 80 percent of state funding, mostly for health and human service needs for Minnesota’s poorest and most vulnerable residents.

“The economic impact, by and large, was blunted by the court ordered spending,” said Minnesota Management and Budget Commissioner Jim Schowalter.

The report indicated that the shutdown did not have the dire economic consequences some feared leading into the longest government closure in state history.

Schowalter said shutdown’s hardest impacts were not purely economic. He said the shutdown damaged the state’s reputation with lenders, caused hardship for state workers and created countless hassles for Minnesotans.

Schowalter painted a picture of state budget leaders plunging into high-risk chaos as they were forced to create an entirely new budgeting infrastructure to handle the state’s day-to-day finances.

As the nation’s eyes turned toward Minnesota’s hobbled government, budget officials lived in constant fear the state’s computers would become a prime target for hackers looking to create high-profile mischief.

Schowalter’s biggest surprise was that “nothing blew up.”

“The governor and legislative leaders understood it was dangerous from the very beginning,” he added.

Schowalter said state is still bracing for lawsuits from contractors and vendors who lost out during the shutdown, which could cause costs to creep higher.

“There are likely to be lingering impacts,” Schowalter said.

Gov. Mark Dayton said he was glad the shutdown didn’t sting taxpayers more.

“I am grateful that the report concludes there was no net cost to Minnesota taxpayers,” Dayton said in a statement. “Unfortunately, it also shows that the worst financial hardship fell upon state employees, who were involuntarily laid off."

Assistant Senate Majority Leader David Hann held a brief news conference after the release of the report saying the blame for the shutdown falls squarely on Dayton.

“It was completely unnecessary,” said Hann, R-Eden Prairie. “We didn’t need to do this and we didn’t need to act this way.”

The end of the shutdown in late July ended one of the stormiest political seasons at the Capitol in state history.

The shutdown started July 1 after budget talks imploded between Dayton and Republican legislative leaders who controlled both chambers for the first time in a generation.

The two sides could not agree how to wrestle down a $5 billion budget deficit, with Republicans refusing to accept Dayton’s proposed tax hikes and the governor opposed to their deeper cuts.

In the end, Dayton agreed to accept a Republican budget solution that met his spending requirements, but delayed more payments to K-12 schools and sold higher interest bonds backed by tobacco settlement money to close the gap.